Lawsuit demands Pittsburgh use block grants for needy

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A lawsuit by four community groups against the city of Pittsburgh and former Mayor Luke Ravenstahl, unsealed Wednesday, could reopen old feuds about how federal development funds are spent. Or it could prompt peace talks.

The 15-month-old lawsuit, filed by the Northside Coalition for Fair Housing, Hill District Consensus Group, Fair Housing Partnership of Greater Pittsburgh and Freedom Unlimited, deals with the city's use of Community Development Block Grant funding from the federal Department of Housing and Urban Development. It claims that the money meant for fighting poverty and desegregating housing has been diverted to street and bridge maintenance, building repairs, traffic control and even parking garages at the swanky SouthSide Works.

Mayor Bill Peduto, in an interview Thursday, said the lawsuit touched on an issue that has been the subject of argument in city council for a decade: "Whether CDBG money should be going towards paving streets and buying capital equipment or breaking the cycle of poverty.

"It could be more well utilized by youth programs, summer employment and those who are on the front lines of helping underserved communities," said Mr. Peduto, who took office in January. "I think what could be taken from this more so than a financial penalty to the city of Pittsburgh is new policies in place to ensure CDBG funding is used as it is intended."

The city expects around $13 million in CDBG funds this year.

The groups' complaint said the city ignored requirements that the money go toward overcoming impediments to fair, desegregated and affordable housing, and that city officials "ignored or refused to carry out their duty to principally address conditions which perpetuate residential, racial concentration." It said the city is required to analyze impediments to fair housing, but had last done so in 2006, and then only as "an 'update' to its 2000 impediments analysis."

The lawsuit is filed under the False Claims Act, which allows whistleblowers -- referred to in the law as relators -- to sue those whom they believe to be defrauding the federal government. The relators can receive a share of any settlement or judgment, which can be as great as three times the amount by which the government was defrauded, with the U.S. Treasury getting the balance.

The Pittsburgh Post-Gazette detailed the increasing use of the False Claims Act locally in a story Sunday.

Under the act, the Department of Justice can intervene to help the whistleblowers, or allow them to proceed independently. Cases remain sealed while the department reviews them.

The department opted on Feb. 4 not to intervene in this case, prompting U.S. District Judge David S. Cercone to unseal the case.

Attorney Don Driscoll, who authored the complaint, said he'll continue the litigation while reaching out to Mr. Peduto's administration.

"We do believe that the objectives of the relators in this case are consistent with certain objectives of this new administration," Mr. Driscoll said. "Obviously this claim relates to practices that occurred during the last administration, and we are hopeful" that there will be policy changes.

He said he hoped the case could be settled in a way that would benefit "neighborhoods that have suffered and are experiencing significant blight right now."

In 2010, Pittsburgh Councilman Ricky Burgess persuaded his colleagues to pass legislation prohibiting a practice called supplanting -- spending CDBG money in low-income communities on things like paving, demolition and recreation, which should be covered by general funds.

Last week he introduced legislation to rank neighborhoods according to need, and direct spending, including CDBG resources, to the 20 neediest areas.

"We should begin to look in every expense of the city to see its impact on those 20 priority communities," said Mr. Burgess, adding that such a move might help address the lawsuit concerns.

Mr. Burgess was an ally of Mr. Ravenstahl and argued that the former mayor was good to low-income communities. "I can't comment on the fairness of their lawsuit," he said. "I simply say the spirit of their argument is one that I agree with."

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